The Recycling of Australian Offshore Structures in Bangladesh: Challenges and Opportunities

Introduction

Australia's offshore oil and gas infrastructure is ageing. Moreover, concentration on new Liquefied Natural Gas (LNG) production units is pushing the oldest oil-rigs, i.e., offshore structures, to be recycled (Wood Mackenzie, 2016). Recently, the Northern Endeavour, an abandoned oil production ship laying far off the coast of Darwin has exposed Australia's challenges over decommissioning all types of end-of-life platforms (both floating and permanent) (Macdonand-Smith, 2020). The specific challenges for the offshore industries and the Australian government to dispose of these excess offshore structures include, limited onshore facility to dispose of the growing volume of end-of-life offshore structures, time constraint, and arrangement of logistics (Macdonand-Smith, 2020). Bangladesh, on the other side, can turn this overcapacity problem into an opportunity using their existing recycling industry. Bangladesh does not have a separate recycling industry for recycling oil and gas platforms, but Bangladesh's ship recycling industry (hereinafter referred to as recycling industry), in fact, recycles both oil and gas platforms, and old ships. Recycling Australian offshore structures in Bangladesh's recycling industry is therefore not only a reasonable solution, but also a new business idea for five reasons.

First, Bangladesh’s labour cost is lot cheaper than Australia; second, Bangladesh has an established recycling industry; third, Bangladesh is a leading recycling country and fourth, its recent growth in steel consumption is indicative of the contribution of its recycling industry (Mohammad Sujauddin, 2017, p. 191). Fifth, since Bangladesh does not have iron ore to support its fast-growing steel demand, recycling of offshore structures of Australian companies is to contribute significantly to its demand. Recycling industry that recycles both offshore structures and end-of-life ships has therefore turned into its primary source contributing largely to the input needs for steel scraps (Mohammad Sujauddin, 2017, p. 192). The authors thus argue for a bilateral agreement between Bangladesh and Australia that aims at creating a legal foundation for recycling Australia’s end-of-life offshore structures in Bangladesh.

In an economic sense, the proposed bilateral agreement for recycling Australia's end-of-life gas and oil platforms (both fixed and floating) is an idea to implement the well-known circular economy approach where both parties gain from the deal. A circular economy refers to a systemic approach to economic development designed to benefit, businesses, society, and the environment (Ellen Macarthur Foundation, n.d.). To that end, circular economy emphasises on the extension of material and resource circularity within the economic system. An appropriate circularity therefore requires minimising the potential adverse effects on the place where the process takes place (Kim, 2020). Recycling has taken a dominant position in applying this approach as it arguably allows reusing the original product and it negates the idea of ‘dumping’ recyclable materials from developed to developing countries. Recyclable materials have turned into economic opportunities for developing countries. However, for achieving higher value of the recycling option, it requires an extended producer's responsibility and establish monetary incentive approach (Rahman, 2019) so that recyclers do not follow their localised and harmful approach to recycling, taking advantage of the challenges of distance. Producer's responsibility and monetary incentive approaches require the operators of the offshore industry to provide financial and technical assistance to the recyclers so that they can overcome the challenges of distance of a recycling location from the operator of an offshore industry (Gregson, 2015).

The authors shed light on the business prospect of recycling the Australian end-of-life offshore structures in Bangladesh. The authors, however, acknowledge that recycling offshore structures is challenging with respect to health, safety of workers, but that can be addressed under the proposed agreement subject to incorporating mandatory requirements of financial and technical assistance as required under the producer’s responsibility, and monetary incentive approaches. This Chapter proceeds by reviewing the relevant literature on Australia’s offshore oil and gas industry and Bangladesh’s recycling industry.